Introduction. Social orientation of Russia means that it is the state’s responsibility to provide an efficient system of social welfare and state guarantees as well as establish proper legal regulation of the social sphere. Thus, it is especially important to conduct research aimed at revealing the relationship and interdependence between social policy and taxation. Theoretical analysis. The article presents and proves a hypothesis that there is a direct correlation between the level of social development and taxation system efficiency. The author suggests an original methodology for calculating taxes for companies and organizations involved in the social sector or providing social services. Empirical analysis. The hypothesis of tax incentives as the most relevant and effective way to support socially significant social sphere in Russia. According to the author, this problem can be solved by implementing a policy of low taxes, flexible changes in the level of tax burden and individual tax rates in the pre-specified range, the wider use of tax incentives system. Results. The paper clarifies the content of the concept of «social services»; reveals the necessity of legal and regulatory definition of «socially important sphere» and establishing a normative body of rules governing financial relations arising in the social sphere; presents an original approach to the interpretation of the concept of «social sphere» and regulation of the social sphere from the perspective of financial resources allocation; clarifies the definition of social sphere and social organizations providing social services; identifies the role of tax incentives in the development of the social sphere; and develops an institutional approach to the description of the correlation between the development of social sphere and taxation by expanding the range of infrastructural elements of the social sphere and taxation system.